Dependent Care Flexible Spending Accounts create a tax break for dependent care expenses (typically child care or day care expenses) that enable you to work. Additionally, if you have an older dependent who lives with you at least 8 hours per day and requires someone to come into the house to assist with day-to-day living, you can claim these expenses through your Dependent Care Flexible Spending Account. If you are married, your spouse must be working, looking for work or be a full-time student. If you have a stay-at-home spouse, you should not enroll in the Dependent Care Flexible Spending Account. The IRS allows no more than $5,000 per household ($2,500 if you are married and file a separate tax return) be set-aside in the Dependent Care Flexible Spending Account in a calendar year.
Please note that IRS regulations disallow reimbursement for services that have not yet been provided, so even if you pay in advance for your expenses, you can only claim service periods that have already occurred. For example, if you are required to pay for all of January’s child care expenses on January 1st, you cannot claim the entire month’s expense until the end of January. However, you may submit a claim every week, at the end of that week, for those expenses.
Eligible expenses include day care, baby-sitting, and general purpose day camps.
Ineligible expenses include overnight camps, care provided by a dependent, your spouse or your child under the age of 19 & care provided while you are not at work.
Expenses may only be claimed for dependents that are under the age of 13; or for older dependents that live with you at least 8 hours each day and are incapable of self-care.
Remember that your election is fixed for the entire year unless you have a qualifying event.